Should I help out with my parent’s finances?

Here’s the answer to this week’s reader question.

As told to Wing Sze Tang

“My mom needs financial help. I’ve just moved out and I’m starting to pay my own bills. Should I help her?”

—Noel

Should you ever loan or give your parents money?

This is a big topic. In recent years, I’ve been having these conversations more and more with clients, whether it’s about parents helping their kids, or kids helping their parents.

I always tell them, put your own oxygen mask on first. You need to cover your own bills and know what you can afford. I recommend creating a detailed budget that tracks your own income and expenses, identifying opportunities to save within that. 

Then, after that step, you can talk to your mom and find out the reason behind her ask. Is she asking directly for money? Or is she feeling overwhelmed with her life stage? Is she already retired and feeling short of money? Is she still working but doesn’t feel she’s saved enough for retirement? Or is she in a tight spot that’s temporary?

Prioritize your own finances to see if you have the capacity to give financially. More often than not, if you’re just starting to work, you probably don’t have a lot of capacity. But you can still give in other ways, and the starting point is having the conversation. 

For example, you can help your mom make a budget, which can be as simple as allocating more money “here” versus “there.” You can go with her to her financial advisor, if she has one, or help her understand how her accounts are doing. Many times, older people have money just sitting in cash, when they could put it into a high-interest savings account (HISA).

Depending on her age, you can ask if she’s applied for all the different government benefits she’s eligible for. For example, most people know about the Canada Pension Plan (CPP) and Old Age Security (OAS). But people over age 65 with very low income may also be eligible for the Guaranteed Income Supplement (GIS)—you may have to apply for it, though.

I always say wealth is more than money. And this is one of those situations where it’s not just about the dollars and cents: it’s really about how you deal with your parents and maintain your relationship, while having an honest and respectful conversation about their financial situation, their goals and your goals, and any struggles that anyone’s having. You want to make sure you’re able to build your wealth while caring for your aging parents.

—Samantha Sykes

Senior investment advisor, sykeswealthmanagement.ca

Have a question for us? Send it to TheGet@neofinancial.com.

Wing Sze Tang is an award-winning journalist based in Toronto. She is the founder of Wayword Media Inc.